February 8, 2018 / 10:46 AM / 2 years ago

UPDATE 4-TDC shares surge after it rejects Macquarie-led approach

* Shares in Denmark’s TDC up almost 18 pct

* Consortium member says there is dialogue with group

* TDC favours $2.5 billion Swedish deal agreed last week (Adds quotes from TDC shareholder AllianceBernstein)

By Jacob Gronholt-Pedersen and Teis Jensen

COPENHAGEN, Feb 8 (Reuters) - Shares in Danish telecoms operator TDC surged by nearly 18 percent on Thursday after it rejected a $6 billion takeover approach from Australia’s Macquarie and three Danish pension funds.

The approach marks the latest attempt at consolidating the fragmented Nordic telecoms market and follows continued speculation that TDC could be a target for both private equity and industry players such as Sweden’s Telia.

TDC has more than three million mobile customers in Denmark and Norway and agreed a $2.5 billion media deal of its own in Sweden only last week.

The Danish company said it had turned down an indicative bid from Macquarie Infrastructure and Real Assets (MIRA) and pension funds ATP, PFA and PKA, adding that it did not think the cash offer represented fair value.

TDC said on Feb. 1 that it had agreed a $2.5 billion takeover of Swedish Modern Times Group’s broadcasting and entertainment business. That deal remains its preferred route to boost value for shareholders, it said on Thursday.

Shares rose to their highest level in 2-1/2 years, touching a peak of 45.58 crowns, still below the reported offer price of between 47 and 48 crowns.

MTG shares slipped by 4.1 percent on the uncertainty.


The consortium confirmed on Thursday that it had approached TDC to discuss an all-cash deal and said it would invest “material amounts of capital into the network infrastructure”.

TDC owns 270,000 km of fibre and copper cables in Denmark and MIRA has a history of investing in such businesses as the world’s largest infrastructure asset manager.

“There is a dialogue (with TDC), and we would like it to continue,” Christian Hyldahl, chief executive of Denmark’s largest pension fund ATP, told a news conference on Thursday.

“There is no formal offer, and we don’t know what the next step will be.”

The consortium said it would not cut any staff if it won control of a company with about 8,000 employees.

The initial approach from the consortium was made before the MTG deal was announced, but ATP’s Hyldahl said that they “wouldn’t rule out any scenarios” even though MTG had not been part of the initial plan.

Pension funds seeking steady returns are regular investors in Danish infrastructure and have played a role in the consolidation of former state companies.

Denmark’s largest telecoms operator with yearly revenue of about 20 billion crowns, TDC owns multiple brands and supplies TV, broadband, landline and mobile to both commercial and consumer markets. It also has a significant business in Norway.

Neither TDC nor the consortium gave any financial details of the offer.

However, sources confirmed to Reuters media reports that the Macquarie consortium had offered about 47-48 Danish crowns per share. An offer of 47 crowns per share would value the company at 38.2 billion Danish crowns ($6.3 billion).

Europe Equity Portfolio Managers Tawhid Ali and Andrew Birse, portfolio managers at TDC shareholder AllianceBernstein, said the bid clearly demonstrates the underlying value in the business.

“We always ask management to actively engage with any interested party to extract the best possible offer for its operations,” they said.

“We don’t believe that the proposed merger with Modern Times Group is the best course of action to maximise value for TDC shareholders.”


In the event of a successful bid, Macquarie would own 50 percent of TDC shares, while the other half would be divided equally between the three Danish funds, a source familiar with the matter told Reuters.

The bidding consortium is working with Nordea Bank and Morgan Stanley on a deal, Danish newspaper Berlingske reported.

Less than two years ago TDC rejected a potential takeover approach from another private equity player, believed to be Apollo Global Management.

Telia has reportedly been a possible suitor for TDC.

After Telia and Norway’s Telenor had to give up a planned merger in Denmark in 2015 because of opposition from European regulators, an acquisition of TDC was seen as one of the few options for Telia to remain in the country long term.

The former national telephone company - still the country’s biggest telecoms operator - was listed in 1994 and the Danish state ceded control of the company later that decade.

In 2005 a consortium of U.S. and British funds, including Apax Partners, Blackstone Group and Permira, took control of the company in a 76 billion crown leveraged buyout - Europe’s biggest at the time. ($1 = 6.0635 Danish crowns)

Reporting by Jacob Gronholt-Pedersen in Copenhagen. Additional reporting by Emil Gjerding Nielson and Teis Jensen in Copenhagen, Paulina Duran in Sydney, Olof Swahnberg in Stockholm; Editing by Keith Weir and David Goodman

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